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Report: Employment Practice Claims, Jury Awards Skyrocket

The median award for all types of U.S. employment-related claims rose 60 percent in 2008, from $204,000 to $326,640, and discrimination verdicts rose 16 percent, from $208,000 to $241,119, according to a recently released study.

According to
Employment Practice Liability: Jury Award Trends and Statistics 2009 Edition, a report by Jury Verdict Research, a national database of verdicts and settlements, the median jury award for employment practice cases has increased significantly during the seven-year period studied (2002-2008).

“A 60 percent increase is a huge increase, but the fact that there was an increase doesn’t surprise me,” said Jonathan A. Segal, a partner with Duane Morris LLP in Philadelphia.

The extraordinary rise in claims and awards may be further fallout from the economic recession, Segal told
SHRM Online. “Juries know how hard it is to find a job, and may put a heavier burden on employers because the cost of being let go or harassed is greater when other options aren’t as available. Until the economy improves, you’re going to see more claims and higher verdicts,” he said.

A Look at the Numbers

According to the report:

Retaliation awards were the highest during the period, with a median amount of $225,000, followed by wrongful termination awards ($201,500), whistle-blower awards ($200,550) and discrimination awards ($200,000).

Sex and race discrimination claims continue to be the most common, but age and disability discrimination plaintiffs received the most compensation from juries over the course of the period analyzed.

Government entities were defendants most often in verdicts rendered from 2002 through 2008 at 43 percent, followed by service/retail companies (41 percent) and manufacturing/industrial companies (11 percent). However, manufacturing/industrial companies paid the most in compensatory awards, with a median award amount of $229,658. Government entities paid the next-highest award amount, with a median of $228,750, followed by service/retail companies ($162,000) and transportation companies ($144,000).

The award median from the period for federal cases was $164,925, and $270,000 for state cases. Federal district court award medians for disability discrimination ($245,000), age discrimination ($231,044), sex discrimination ($161,000) and race discrimination ($150,000) were lower than state court award medians for disability discrimination ($292,000), age discrimination ($381,000), sex discrimination ($252,184) and race discrimination ($257,239).

The median settlement amount was the highest in the past decade at $90,000—a 20 percent jump over the previous year’s median amount of $75,000.

Discrimination and retaliation settlements tied for the highest award collected overall from 2002 through 2008, at a median amount of $70,000, followed by wrongful termination settlements at $57,862.

Moreover, employers won only 39 percent of discrimination lawsuits in 2008, tied for the worst win rate in the past decade; the lowest win rate (33 percent) was in age discrimination cases and the highest (52 percent) was in disability discrimination cases.

EEOC Sees Surge in Filings

According to the U.S. Equal Employment Opportunity Commission (EEOC), the number of workplace discrimination charges filed with the agency increased 15 percent in 2008 to the unprecedented total of 95,402. The EEOC is experiencing the highest level of charge filings since its creation in 1965.

“The EEOC has not seen an increase of this magnitude in charges filed for many years. While we do not know if it signifies a trend, it is clear that employment discrimination remains a persistent problem,” EEOC Acting Chairman Stuart J. Ishimaru said in a statement.

However, an EEOC spokesperson told
SHRM Online in April 2008 that part of the increase in claims during the first few months of the fiscal year could be attributed to the placement of the intake questionnaire on the agency’s web site to help address overwhelming call center volume.

The EEOC filed 290 lawsuits, resolved 339 lawsuits and resolved 81,081 private-sector charges in 2008, according to the agency. “Through its combined enforcement, mediation and litigation programs, the EEOC recovered approximately $376 million in monetary relief for thousands of discrimination victims and obtained significant remedial relief from employers to promote inclusive and discrimination-free workplaces,” the agency said.

It was charged that Cheesecake knew about and tolerated repeated sexual assaults against six male employees by a group of male kitchen staffers though the company denied the allegations. However, according to the EEOC, the evidence overwhelmingly showed that the men suffered sexually abusive behavior, including abusers directly touching victims’ genitals, making sexually charged remarks, grinding their genitals against them and forcing victims into repeated episodes of simulated rape. Managers witnessed employees dragging their victims kicking and screaming into the refrigerator, the EEOC charged.

Complaints to virtually every manager at the restaurant were made, but they never put a stop to it. Victims felt helpless, the agency said, and one finally had to call the police.

EEOC v. Regal Entertainment Group Inc., CV06-04145-ABC: Regal Entertainment Group, a national movie theater chain, was ordered to pay $175,000 and furnish significant remedial relief to settle a sex discrimination lawsuit in which it was charged that the company subjected a male employee to sexual harassment by a female co-worker and then retaliated against him—along with two supervisors who tried to help—for complaining about the unlawful conduct.

According to the EEOC, the male employee at a Regal theater in Marina del Rey, Calif., was subjected to a sexually hostile workplace by a female co-worker who repeatedly grabbed his crotch. When the male victim and his direct supervisor complained to the theater’s then general manager, she failed to take adequate steps to stop or prevent the harassment. Instead, the EEOC said, she retaliated against the harassed employee and two other supervisory employees (male and female) who are part of the EEOC’s suit. The retaliation included unwarranted discipline, unfairly lower performance evaluations and/or stricter scrutiny of performance.

EEOC and Reherman v. St. John Health System Inc., 09CV624 GKF-TLW: St. John Health System Inc. of Tulsa, Okla., was ordered to pay $100,000 and furnish other relief to settle a disability discrimination lawsuit in which it was charged that the company violated the Americans with Disabilities Act by failing to reasonably accommodate a hearing-impaired operating room scrub technician.

LaQuita Reherman had been employed by St. John for approximately six years when she was removed from her scrub technician position in March 2006 after several physicians complained about her being hard of hearing. Reherman wears hearing aids in both ears, the EEOC said, but would have been able to hear doctors’ instructions adequately if it were not for their practice of playing loud music in the operating room. These disturbances, coupled with her hearing impairment, caused the problems, the EEOC said.

Reherman made it known to St. John that she needed assistance in finding another position, but the hospital made no effort to assist her. The hospital simply put her in another position temporarily and then told her to find a new job in the hospital system, the EEOC said. St. John terminated Reherman in June 2006 after she proved unable to find a vacant position.

EEOC v. Bellco Credit Union, 06-cv-01883 CMA-MEH: Bellco Credit Union was ordered to pay $57,250 and furnish other relief to settle an age discrimination lawsuit in which it was charged that a then 61-year-old teller in Bellco’s Harlan Branch in Westminster, Colo., was fired in October 2003 because of her age.

In addition to the monetary settlement, Bellco has agreed to post its anti-discrimination policy, provide training about anti-discrimination laws to its employees and managers, and make periodic reports to the EEOC.

In 2008, 24,582 age discrimination charges were received by the EEOC, representing a 28.7 percent increase over 2007.

Risk Management

To reduce exposure to costly liability, employers should consider the following:

Give employees time to improve. Because of the economic recession and the scarcity of jobs, employees are more likely to sue, Segal said. “It’s more important than ever that employers give notice to employees when their performance is lacking, giving them a reasonable opportunity to improve” rather than just firing them, he said.

Be consistent. Cases that are similar should be handled similarly. “Cases with the absence of consistency are often what give rise to claims,” Segal said.

Provide recognition. “Employees look to employers for more than compensation,” Segal said. In an unstable economic environment and with less monetary compensation to go around, employees need more recognition. “Managers need to step back and understand that in a bad economy, they need to make sure to hold on to talent, and that includes giving recognition and appreciation. If that gets lost, it’s now more dangerous than ever,” Segal said.